"We think Patrick is seeking to increase its stake, and
considering the unconditional nature of the offer, is not seeking
full ownership.

"But they are seeking a stronger stake over 50 per cent.

"Given the recent share price they have an opportunity to
increase their stake at a fair to value price."

Patrick also faces a barrier to a full takeover in the form of
British billionaire Richard Branson, whose Virgin Group holds 30
per cent of Virgin Blue.

A Virgin Blue spokeswoman said today that Mr Branson had not yet
been informed of the takeover.

"We haven't be able to reach him yet," she said.

But Mr Branson told journalists in Sydney in December that he
had no intention of selling down his interest.

Patrick today said it has not discussed the offer with Virgin
Group.

Analysts also said Patrick, which gathers about 14 per cent of
its underlying earnings from its Virgin Blue investment, might also
be seeking greater influence over the airlines operations and
strategic direction.

"The may be some benefits for Patrick from increased management
input," an analyst at a US brokerage said.

Mr Mitchell said the transaction would also likely be earnings
per share positive for Patrick going forward.

But Patrick stock was likely to suffer weakness after analysts
downgraded earnings outlooks for Virgin Blue last week.

On January 19, Virgin Blue slashed its annual net profit
forecast for the year to March 31.

It said profit would be 10-15 per cent down on the previous
year.

That translates to a range of $135 million to $143 million, down
from from $158.5 million previously.

Analyst later cut their earnings outlook on the carrier and cut
Patrick's profit estimates by about nine per cent at the same
time.

Patrick said its off-market offer, which is being made through
its wholly owned subsidiary Plzen Pty Ltd, realises full value for
Virgin Blue shareholders.

"Patrick management considers that the offer is important to
Patrick shareholders because it will allow the company to take a
clear majority in Virgin Blue," managing director Chris Corrigan
added.

Following the offer, Mr Corrigan said Virgin Blue would continue
to manage and develop its existing business.

Patrick would also continue to conduct Virgin Blue's commercial
operations under the existing Virgin Blue brands.

"Patrick considers that the value in Virgin Blue is driven by
its current business model," Mr Corrigan said.

Mr Corrigan also said that the likelihood of another bidder
emerging was remote given that between them, Virgin Group and
Patrick own 70 per cent of Virgin Blue.

Under a shareholders agreement between the pair, each company
supports each others nominees to the Virgin Blue board.

"A third party will not be able to displace the nominees of
Patrick or the Virgin Group shareholders on the board of Virgin
Blue," he said.

Tolhurst broker Marcus Padley said it was highly unlikely that
Patrick wanted 100 per cent of Virgin Blue.

"Just an extra 4.7 per cent to take them over 50 per cent and
give them control, in which case they will be unlikely to pay up
much more than this," he said.

Patrick will lodge its bidder's statement on Monday.

Mr Corrigan will stand aside as chairman of Virgin Blue for the
period of the offer.

At 1136 AEDT, Virgin Blue shares were up 21 cents at $2.01.
Patrick was down five cents at $6.09.